Heavy mineral sands developer Titanium Sands (ASX:TSL) has signed a binding term sheet to acquire James Global, which is an associate company of JAT Holdings (CSE:JAT.N0000) as its in-country partner to assist with the company’s activities in Sri Lanka.
Under the agreement, Titanium Sands will acquire 100% of the issued share capital of James Global through its Sri Lankan subsidiary in consideration for Titanium Sands shares and a cash payment of US$300,000 on settlement. The company says the existing ground held by James Global complements its existing Mannar Island Heavy Mineral Sands (HMS) Project and future growth plans.
The company will pay a further US$400,0000 in cash and 50 million shares on completion of an initial 50 or more hole due diligence exploration drilling program on the exploration permits held by James Global, and a laboratory analysis of drilling samples results which confirm intersections of at least 5% over at least 2m in at least 20 holes on the exploration permits.
The agreement also stipulates that Titanium Sands will spend a minimum of $60,000 on exploration and development on the ground held by James Global within 3 months from settlement
Titanium will also pay US$500,000 in cash and issue 90 million ordinary fully paid shares on receipt of a JORC 2012 compliant resource of at least 10 million tonnes at a minimum grade of 5% total HMS on the exploration permits held by James Global within 9 months of settlement.
The agreement also stipulates that Titanium Sands will spend a minimum of $60,000 on exploration and development on the ground held by James Global within 3 months from settlement.
Completion of the transaction is subject to conditions including the completion of further due diligence by the parties within 4 weeks, and execution of a formal agreement for the transaction including a formal consulting arrangement for the proposed in-country partnership between Titanium Sands and JAT Holdings on mutually agreeable terms.
Other conditions that need to be satisfied include the parties obtaining all required regulatory approvals, and Titanium Sands raising funds to fulfil its payment obligation under the acquisition. The parties have 6 months, or a mutually agreed timeframe to satisfy these conditions to proceed to settlement.
As of 31 March 2023, Titanium Sands held cash and equivalents of around $187,000, and notes it recently secured $700,000 in debt facilities from major shareholders which provided it with funding to meet its short-term working capital requirement.
Given the cash payments and minimum expenditure required for the proposed transaction exceed Titanium Sands’ available funding, the company says it will need to raise a further $2 million. This extra funding will provide it with sufficient working capital to fund the proposed transaction and carry out proposed exploration and development activities if the transaction proceeds.
Titanium Sands intends to use up to US$1.2 million on cash payments due under the proposed transaction
The company expects these funds to be raised through further debt facilities, a private placement, and a pro-rata offer of new shares to shareholders.
Titanium Sands intends to use up to US$1.2 million on cash payments due under the proposed transaction, about US$460,000 on continued operation spend at the Mannar Island Project, and about US$110,000 on exploring the ground held by James Global, including initial due diligence drilling, sample analysis, and resource modelling.
JAT Holdings is a Colombo Stock Exchange (CSE) listed company focused on the finishing and furnishing sectors across South Asia, Sri Lanka, Bangladesh, India, Maldives, Seychelles, Mauritius, Kenya, and Ghana. The company specialises in finishing and furnishing solutions such as coatings and paints, as well as directly sourcing titanium dioxide pigments used in its products.
Titanium Sands says potential synergies created by the acquisition and proposed in-country partnership could be beneficial to both parties. Additionally, both companies believe the long-term outlook for ilmenite feedstock is positive with widespread use of titanium dioxide pigments in industrial and consumer goods.
Titanium Sands is an ASX-listed heavy mineral sands developer focused on the Mannar Island Ilmenite-Leucoxene Project in north-west Sri Lanka. The project comprises 5 exploration licences on Mannar Island, located adjacent to Sri Lanka’s mainland coast.
Images: Titanium Sands Ltd
